Are you planning to start a new Micro / SME Business unit? or Do you want to expand existing Micro / SME unit? A hassle free, Govt. supported loan scheme for you - MUDRA Loan Scheme. It allows you to borrow essential fund upto 10 lakhs for utilization of your entrepreneurial talent. It's a simplified, easy to access scheme with no collateral security needed. Here is the comprehensive details about PM MUDRA Loan scheme. First of all we see what is MUDRA and then those the rest.
Pradhan Mantri MUDRA Yojana (PMMY) or PM MUDRA Loans Scheme
PM MUDRA Loan Scheme or Pradhan Mantri MUDRA Yojana (PMMY) Loan is a scheme launched by the Hon’ble Prime Minister Sri Narendra Modi on April 8, 2015 for providing loans up to 10 lakhs to the non-corporate, small / micro enterprises (non-farm). These loans are classified as MUDRA loans under PMMY. These loans are given by Commercial Banks, RRB, Small Finance Banks, MFI and NBFC. The borrower can approach any of the lending institutions mentioned above or can apply online through an exclusive portal udyamimitra.in . Under the aegis of PMMY, MUDRA has created three products namely 'Shishu', 'Kishore' and 'Tarun' to signify the stage of growth / development and funding needs of the beneficiary micro unit / entrepreneur and also provide a reference point for the next phase of graduation / growth.
PM MUDRA Loan Scheme at a Glance
PM MUDRA Loan Scheme is being implemented to bring all enterprises to a systematic financial support that ensures they are not exploited by informal funding agencies. This will increase the confidence of the entrepreneurs creating build and grow attitude both in new and existing business unit.
1. PM MUDRA Loan Categories
There are three categories created to distribute PM MUDRA Loan named: Shishu, Kishor and Tarun. These three categories signify the stage of growth or development and funding needs of the borrower. Categories also to provide a reference point for the next phase of graduation / growth to look forward to.
The financial limit for these categories are:
- Shishu: Covering loans upto Rs. 50,000/-
- Kishor: Covering loans above Rs. 50,000/- and upto Rs. 5 lakhs
- Tarun: Covering loans above Rs. 5 lakhs to Rs. 10 lakhs
2. Purpose of PM MUDRA Loan Scheme
PM MUDRA Loan is given mainly to income generation and employment creation in all sectors of society. It is extended but not limited to:
- Business loan for Vendors, Traders, Shopkeepers
- Business loan for Service Sector activities
- Working capital loan through MUDRA Cards
- Equipment Finance for Micro Units
- Transport Vehicle loans for commercial use only
- Loans for agri-allied non-farm income generating activities, e.g. pisciculture. bee keeping, poultry farming, etc.
- Loan for Tractors, tillers as well as two wheelers used for commercial purposes only
- Need based term loan
- Overdraft (OD) limit
- Composite loan for acquiring capital assets
- Marketing related requirements
3. Eligible Borrowers of PM MUDRA Loan Scheme
PM MUDRA Loan scheme requires only a very minimum eligibility criteria that attracts any person or business entity who has a sufficient skill and idea of business. In the financial point of view, the first and most wanted eligibility of a borrower is satisfactory credit track record, ie., borrower should not be a defaulter to any bank or financial institution. The list of eligible borrowers are:
- Proprietary concern
- Partnership Firm
- Private Ltd. Company
- Public Company
- Any other legal forms
4. PM MUDRA Loan Sources
- Commercial Banks
- Regional Rural Banks (RRB)
- Small Finance Banks
- Micro Finance Institutions (MFI)
- Non Banking Financial Company (NBFC)
5. Margin Money or Promoters Contribution for PM MUDRA Loan
Margin Money or Promoters Contribution is as per the policy framework of the financial institution that disburse the loan, based on overall guidelines of RBI. Banks may not insist for margin for Shishu loans. Kishor and Tarun categories may require margin money upto 20% depends discretion of financial institutions. Usually it may insist 10%.
6. Interest Rate for PM MUDRA Loan
Interest rates are to be charged as per the policy decision of the financial institutions and be reasonable.
7. Processing Charges for PM MUDRA Loan
Lending institutions may consider charging of processing fee as per their internal guidelines.
8. Security for PM MUDRA Loan
- No Collateral security is needed to obtain any category of PM MUDRA Loan scheme.
- First charge on all assets created out of the loan extended to the borrower and the assets which are directly associated with the business / project for which credit has been extended.
- Demand Promissory Note (DPN) may be requested depends the nature of the business and discretion of the financial institution.
- CGTMSE (wherever felt desirable) / MUDRA Guarantee cover (as and when introduced).
9. Tenor Repayment of PM MUDRA Loan
Maximum tenor of 36 months in easy EMI.
Procedure To Get PM MUDRA Loan
- The borrowers who wishes to apply for collateral free loan under PMMY may approach any of the Public / Private Sector Commercial Bank, RRB or Co-operative Bank branches in their area with a proper business idea and loan application.
- After due processing of loan application, the lending institution will sanction the loan.
- The borrower has to execute loan documents and complete other formalities as per the requirement of the lending institution.
- The loan will be released to undertake small business activities or micro-enterprises.
How To Apply For PM MUDRA Loan?
1. Online - Through Udyamimitra website, you can apply for PM MUDRA Bank Loan. It's the most convenient and easiest method to submit your application.The second method, you can decide a bank or other listed financial institution and visit their websites and apply for it. Most of the Commercial ( Nationalised and private) Banks have the separate link for applying PM Mudra Bank Loan.
2. Offline - You can download application form, take printout, fill the details, attach the supporting documents and submit your favourite bank or other financial institution.
Documents Required For PM MUDRA Loan
If you have decided to go for PM MUDRA bank Loan, review this document check list to make your loan application processed fast and without issues. The document check list given here is a general requirement and not to be considered final. There may be slight changes (addition / omission) happens depending which type financial institution you have chosen and the nature of your business.
- Identity Proof - Self certified copy of Voter’s ID card / Driving License / PAN Card / Aadhar Card / Passport.
- Photos (two copies) of Proprietor / Partners / Directors.
- Residence Proof - (Any one of the documents listed here) Self certified copy of Ration card, Recent telephone bill, Recent electricity bill, Property tax receipt (not older than 2 months), Voter’s ID card, Aadhar Card, Passport of Proprietor / Partners / Directors.
- Proof of SC / ST / OBC / Minority ( if applicable).
- Proof of Identity / Address of the Business Enterprise - Copies of relevant licenses / registration certificates / other documents pertaining to the ownership, identity and address of business unit (if applicable).
- Applicant should not be defaulter in any Bank / Financial institution (may verify your data with CIBIL score or the like credit scoring agencies).
- Bank Account Statement for the last six months, from the existing banker, if any.
- Last two years balance sheets of the units along with income tax / sales tax return etc. (applicable only if existing business establishments and for all cases from Rs. 2 Lakhs and above).
- Projected balance sheets for one year in case of working capital limits and for the period of the loan in case of term loan (Applicable for all cases from Rs. 2 Lakhs and above).
- Sales achieved during the current financial year up to the date of submission of application (if applicable).
- Project report (for the proposed project) containing details of technical & economic viability.
- Memorandum and articles of association of the company / Partnership Deed of Partners etc.
- In absence of third party guarantee, Asset & Liability statement from the borrower including Directors & Partners may be sought to know the net-worth.
Acknowledgement Slip for Loan Application Under Pradhan Mantri MUDRA Yojana (PM MUDRA Loan Scheme)
After submitting your application and supporting documents to your financial institution, you must collect the acknowledgement slip for the loan application which is very important and a must have document for each applicant. It will be your reference for anything related to your PM MUDRA Loan application and follow up procedures. Following image shows the blank acknowledgement slip and when you collect it, make sure it must be filled with the relevant data as follows:
Application (system generated / manual) Number .....................................................
Date of Application .......................................................
Name of the Applicant(s) ..................................................................................................
Loan Amt. Requested for ..........................................
Signature of Applicant(s) ......................................................
Signature of Branch official .....................................................
When Should You Think About MUDRA Loans?
- You have skills and ideas to start a small business unit. But no fund to do the rest - Opt MUDRA Loan. Upto Rs. 50,000/- no margin money required.
- You have skills and ideas to start a small business unit. I have only some fund to do the rest - Opt MUDRA Loan. Above Rs. 50,000/- to 10 lakhs, only 10% margin money required.
- You have already started a micro business unit and it functioning. Do you think that if you have some more fund, you could expand the unit and make a good position in the sector? - Think MUDRA loan. If your requirement is below 10 lakhs, this is the best option.
- You already have started a micro unit but stuck the functioning due to lack of fund. If you have some fund, it could be revived to good position - Your best option is MUDRA loan. You will be supported upto 10 lakhs without hassles.